Dell EMC Channel Chief Byrne Calls Services A 'Pot Of Gold,' Partners Agree, But Note 'Knee-Knocking' Challenges

Top Dell EMC sales and channel executives say they'll make services – in several forms – a central part of the company's channel strategy, and while partners agree that selling services is lucrative, the say getting into that business can be daunting and risky.

"It's a pot of gold, and I don't think we're fully utilizing it," Channel Chief John Byrne told partners at the Dell EMC World conference in Austin, Texas. "It's a phenomenal opportunity for the channel ecosystem, the partner ecosystem. We have made significant progress on a lot of our services … We've seen partners making a lot of money and enjoying it. We have a lot of work to do between now and December working with [Dell EMC services chief] Howard Elias working on how do we put it on steroids. How do we truly open this up?"

Before the close of its $58 billion acquisition of EMC, Dell reached an agreement to sell its pure-play services arm to NTT Data, and the divestiture opens a door for partners.

Related: Dell Technologies CEO Michael Dell On 'Being No. 1 In Everything,' Not Making Money On Smartphones And Dell EMC's Go-To-Market Engine

Depending on what customers ask for, partners can be trained to deliver end-to-end services, or they can also resell Dell EMC services while reselling products or others can choose to resell products while Dell EMC takes care of the services portion of the deal.

Bill Scannell, Dell EMC enterprise sales chief, said delivering end-to-end services tends to be more profitable than product resale, but noted that how partners handle services largely depends on what customers want. "It's really up to you to get the required training. It's about your customers' and our customers' experience. We want to make sure we measure twice and cut once."

Dell EMC Chief Commercial Officer Marius Haas said he'd like to see partners attach services to every customer engagement.

"We think [services] is a big part of the future," said Stephen Power, managing partner at RoundTower Technologies, a Cincinnati, Ohio-based Dell EMC partner. "We built a world-class services delivery organization. We built it out, we took some lumps early on. It's difficult to do. It's daunting, but once you get there, that's where all the profitability is."

Power said having a strong services business is a key component of a VAR's ability to offer customers simplicity. "They want the same simplicity we do," Power said. " Imagine going into a customer and having a data analytics conversation and then rolling that analytics solution out on top of a converged or hyper-converged platform and then providing a managed service around that. For the VAR, that's the Triple Lindy. You're having a differentiating conversation, you're rolling it out on a turnkey platform and then you're wrapping a managed service around it."

Dan Serpico, CEO of FusionStorm, a large Dell EMC solution provider based in San Francisco, said his company has recognized the importance of a strong services business, but added that establishing that business can be expensive and difficult, especially for smaller VARs that may not be able to cope with the budget pressures involved.

"It does require a different direction, a different kind of investment," Serpico said. "It's not something a smaller reseller is going to be able to do quickly. There's a lot of risk in it. Utilization is critical. So if you're not running at high levels of utilization, you've got labor, a fixed cost, that is gets really painful quickly. The flip side is if you're understaffed and you're outsourcing all these projects you potentially lose control over the opportunity, you've got to higher cost. The mix is more science than art to manage through."

Power illustrated the point. "Sometimes it's hiring before the revenue, and sometimes it's hiring after the revenue, and that can be a knee-knocking experience," he said. "You'll lose a large customer. Our services customers are our large customers, and if you go in there and make mistakes, they're not going to be a customer for long. And if they're not a customer, you're not getting the hardware drag or the software drag so you lose it all."

Still, despite those challenges, the consequences for partners that don't develop a services business could be dire, Power said. "There are a lot of VARs that choose not to go down that road," he said, "and I think they'll suffer for it eventually."